Author Archives: David Blake

From Savannakhet to Somerset: United by controversial EDF megaprojects

Two controversial energy infrastructure megaprojects located on opposite sides of the world, one in Western Europe and the other in Southeast Asia, are linked in more subtle ways than the most obvious bond i.e. they share the same main project developer. Hinkley Point C (HPC) nuclear power station, proposed to be built in the English county of Somerset and the Nam Theun 2 (NT2) Hydropower Project in operation since 2010 in central Laos are both megaprojects awarded to the French state-owned power utility, Électricité de France (EDF) as the main developer and shareholder in the respective project consortia.

Both projects are touted by their proponents as low-carbon energy alternatives to fossil fuel burning power plants that are designed to economically supply perceived unmet energy demands; both represent the biggest infrastructure projects the respective host nations have built at the time of construction; both projects have considerable externalities not being shouldered by the developers due to taxpayer subsidised risk guarantees; and both are mired in complex multi-stakeholder debates over their socio-economic and environmental sustainability credentials.

Beyond these similarities, both HPC and NT2 share a common pattern of politicisation at the highest levels of government, both at home and abroad, as vested interests clamour for each project to proceed at whatever the cost (both financially and politically). This situation inevitably leads to some serious political and economic distortions and inherent risks that emerge with time, that could have been avoided had less high profile, cheaper, smaller, more accountable, devolved and transparent energy projects been developed. Thus, it might be an interesting exercise to compare these two megaprojects and see if any wider lessons can be drawn from the common linkages discernible, despite the significant physical distance and domestic development context that separates them.

Nam Theun 2 – a dam too far for EDF and the Banks?

As the historically older case, this hydropower project had an extended period of gestation between initial development plans being proposed and eventual construction many decades later. A pre-feasibility study was first conducted in 1986, although basin planners with the multi-lateral river basin organization, the Mekong Committee, had already identified the dam site as holding potential for hydropower generation in the 1960s[1]. With the Indochina War being expedited across Laos (as “the other theatre”) and eventual 1975 regime change in Laos ushering in a one party communist state, geo-political conditions were not conducive for the project to be resurrected until the early 1990s, when the plans were dusted off once more by international actors.

The 39 m high Nam Theun 2 dam under construction in 2008. Much of the work was sub-contracted out to Thai construction companies and the cement was sourced from over 600 kms away in Saraburi, Thailand (Source: International Rivers)

The 39 m high Nam Theun 2 dam under construction in 2008. Much of the work was sub-contracted out to Thai construction companies and the cement was sourced from over 600 kms away in Saraburi, Thailand (Source: International Rivers)

It took ten years in the appraisal and preparatory stage from 1995 before final approval by the World Bank’s Executive Directors in lending countries was granted, thereby rubber-stamping the proposed social and environmental safeguards to mitigate and compensate for project impacts. This approval followed a year long period of “public consultations” and “participatory workshops”, conducted both internationally and domestically (though it was widely acknowledged that no meaningful participation was possible in the Lao context). In no reasonable sense could the developer claim to have gained broad public acceptance or employed a “fair, informed and transparent decision-making process”, according to World Commission on Dams principles, given the depth of opposition expressed by civil society globally.

I attended the Bangkok leg of the “technical consultations” held in August 2004, at which numerous civil society actors and dam-impacted villagers from Thailand, including a handful of impactees from the World Bank-funded Pak Mun dam, gave a series of heartfelt and well-reasoned arguments why it was an ill-conceived idea to build the NT2 dam project. The Pak Mun dam in Northeast Thailand became infamous for the multiple impacts it caused to fisheries and aquatic resources based livelihoods, sparking local protests and wider social conflict that still simmers today. But the Bank officials brushed off the objections with their own technocratic arguments as to why constructing the project was Laos’ only option to deliver it from abject poverty through electricity revenue generated and develop economically based on a rational utilisation and export of its natural resource asset base. At all the other consultations worldwide, voices of opposition outweighed those in support both in terms of numbers and credibility of the arguments presented. However, it was clear the decision to proceed had been taken long before the consultations were held and the World Bank was more interested in issuing a “blank cheque” to the developers, as maintained by David Hales of the Worldwatch Institute who chaired the public workshop on NT2 in Washington in September 2004.

The NT2 Hydropower Company (NTPC) that built, owns and operates NT2 is itself a consortium of three main shareholders, namely EDF International (40 %), the Electricity Generating Public Company of Thailand (EGCO) (35 %), and the government of Lao PDR’s Laos Holding State Enterprise (25 %). NTPC sell 90 % of the power generated from the 1,070 MW installed capacity plant to the Electricity Generating Authority of Thailand (EGAT), with the remainder consumed domestically in Laos.

Construction officially began in November 2005 and NT2 was commissioned in March 2010, having cost about $1.45 billion, with funding derived from multiple sources, including France’s Coface, Sweden’s EKN, Norway’s GIEK, the ADB, Multilateral Investment Guarantee Agency, the World Bank, the French Development Agency, the Export-Import Bank of Thailand, Nordic Investment Bank, nine international banks and seven Thai banks. The Lao government’s equity share in NTPC was financed chiefly by a loan from the European Investment Bank (EIB) and Asian Development Bank (ADB), with the multi-lateral banks providing political risk guarantees to the developers and private lenders, in effect, thus placing the main burden of risk on taxpayers in the contributing countries and into the future, with the Lao people.

Due to its size, prestige and symbolic nature, NT2 neatly embodied for all representatives of the temporarily thwarted dam building industry (domestically and internationally) a significant step towards the realisation of the popular narrative created that Laos could become the “Battery of Asia” or “Kuwait of Southeast Asia”, if the slumbering nation could only maximise the development of its hydropower potential. Technically, the dam project appears to have performed reasonably, but socially and environmentally the dam has been a predictable disaster, with the impacts falling particularly heavily on the downstream riparian people living along the Xe Bang Fai river in Khammouan and Savannaket provinces.

The downstream channel constructed below the power station takes 350 m3/s of turbinated water down to the Xe Bang Fai river, adding significantly to its normal background flows and seriously impacting the aquatic ecology and river-dependent livelihoods (Source: Aurecon Group)

The downstream channel constructed below the power station takes 350 m3/s of turbinated water down to the Xe Bang Fai river, adding significantly to its normal background flows and seriously impacting the aquatic ecology and river-dependent livelihoods (Source: Aurecon Group)

A significant, but invariably overlooked, historical feature of NT2 and the manner in which funding approval was granted by the multi-lateral banks, relates to the highly politicised nature of the campaign pushing for its development,  that included being able to harness the support of national leaders at critical moments. At one point in late 2004, it seemed like commitment was wavering from several crucial parties to backing the project, including some ambivalence on the French and American sides as to whether this was a worthy project to be involved in, given the patently high social and environmental impacts that would result and rising voices of opposition. Seemingly in a carefully calculated bid to sway any doubters of the project’s strategic importance, proponents started playing the “China card”, suggesting that if the Western institutions failed to back it, then China would fill the gap in a trice and takeover the project. This scare tactic seemed to do the trick, because French President Jacques Chirac was understood to have intervened and secured European loans and grants to secure EDF’s central involvement, a fact tacitly acknowledged by the French Ambassador to Laos at the project’s powerhouse construction inauguration ceremony in November 2005. The ceremony was also attended by the Lao Prime Minister, Bounnhang Vorachit and then Thai PM, Thaksin Shinawatra, representing the country likely to benefit most from the project in terms of immediate construction contracts, subsidised imported energy and externalisation of socio-ecological costs. Building large dams in Thailand has been controversial since the early 90s, thanks to an active civil society and relatively free media.

The Nam Theun 2 Hydropower Project (NT2) in central Laos and relative position of Savannakhet, where the bulk of the project’s power leaves Laos for the Thai market (Source: Baird and Quastel, 2015)

The Nam Theun 2 Hydropower Project (NT2) in central Laos and relative position of Savannakhet, where the bulk of the project’s power leaves Laos for the Thai market (Source: Baird and Quastel, 2015)

There were strong suspicions amongst civil society observers and energy analysts that the World Bank doctored its figures and used incorrect assumptions in order to make the economic argument for the dam stack up, prior to final appraisal in March 2005. Civil society critics had always argued that there was no credible economic case for the NT2 project going ahead, above and beyond its poor social and environmental score sheet, as the amount of electricity it was supposed to produce for export could easily be covered by demand side management in the Thai energy market. At least 153 NGOs recorded their opposition to the dam project going ahead during the evaluation phase.

In 2011, the World Bank published a report entitled “Doing a Dam Better: the Lao People’s Democratic Republic and the story of Nam Theun 2”, in which it is claimed the story of NT2’s development would provide “valuable insights and lessons that can be applied in future projects of similar size, scope, and complexity”. It was also held up as “strong evidence” of the Bank’s re-engagement in and commitment to supporting the large hydropower sector, after a decade-long hiatus prior to and after the seminal World Commission on Dams (WCD) report. Thus, the NT2 project fulfilled many functions for the dam lobby, not only in terms of Laos but worldwide, as a harbinger of renewed lending for “high risk, high reward” hydraulic development projects. And sure enough, it did open up a flood of cheap finance, subsidies and externalisation of risk for the ever-thirsty industry across Asia, Africa and Latin America.  The World Bank’s storyline of success with the project has continued since, despite the many reports issued that challenge this stale narrative with compelling evidence, including those from the project’s own Panel of Experts (PoE), but also numerous civil society studies conducted.

The project is expected to generate total revenue of $1.9 billion over the course of its 25 year concession period, of which some 25 % should, in theory, make it into Lao government coffers to help fund rural poverty alleviation programmes. However, because the project’s financial arrangements are so murky, particularly on the Lao government side, there is no guarantee in place that the funds generated will be spent where they were originally intended. Due to a culture of intense secrecy and unaccountability within the heart of Lao state governance, it is uncertain to what extent dividends, taxes and royalties from NT2 have been directed towards social security, education or health programmes. Without an independent audit, suspicions remain that revenues are just co-mingled with other public resources or even mis-appropriated, calling into question any claims by the Banks of a “model project” in water or energy governance. Tellingly, a spate of subsequent hydropower projects in Laos have ignored the long list of “safeguards” touted as the new standard by the NT2 proponents and fast-tracked dam construction without even basic public consultations. In Transparency International’s 2015 Corruption Perception Index, Laos was ranked 139th out of 168 nations worldwide.

Children bathe in the dam’s 450 km2 Nakai reservoir near a resettlement village. Despite assurances by the developers to remove all vegetation prior to flooding, much of it was left and is slowly rotting in the water (Source: FIVAS)

Children bathe in the dam’s 450 km2 Nakai reservoir near a resettlement village. Despite assurances by the developers to remove all vegetation prior to flooding, much of it was left and is slowly rotting in the water (Source: FIVAS)

Meanwhile, most of the goals of the social and environmental mitigation programme remain unmet, while many of the impacts identified by critics (and some additional ones) have been borne out in practice. Resettled families have not been made demonstrably better off and many are still reliant on dwindling material handouts from the NTPC and Lao government to survive, while downstream along the Xe Bang Fai recipient river in Khammouan and Savannakhet provinces, fish populations have crashed and riverside vegetable gardens lost amongst a catalogue of impacts, impoverishing the livelihoods of the tens of thousands of people that once relied on them. Rainy season flooding has been exacerbated by the power station additional flows, further eroding the sustainability of local livelihoods through destruction of rice crops. Meanwhile natural forests have been destroyed and wildlife decimated in the “protected area” in the headwaters of the NT2 reservoir, despite the assurances of the dam proponents that the project’s development would ensure their protection.  As Professor Thayer Scudder, an eminent global expert on the social impact of dams, Commissioner for the World Commission on Dams and one of the three person Panel of Experts for the NT2 project, commented in a New York Times article in August 2014, after nearly two decades spent closely monitoring the dam’s development process, “Nam Theun 2 confirmed my longstanding suspicion that the task of building a large dam is just too complex and too damaging to priceless natural resources”.

 

Hinkley Point C – more economic madness?

Nuclear power was first developed in the United Kingdom during the 1950s and 60s with the somewhat cornucopian promise of abundant clean, cheap and reliable energy for present and future generations to benefit from. The British public generally believed the claims made by the industry and politicians, so little overt opposition to nuclear energy (unlike nuclear weapons) appeared until the first large-scale nuclear accident occurred at Three-Mile Island in 1979 followed six years later by nuclear meltdown disaster at Chernobyl. These events and various setbacks within the industry prompted a much wider debate about the technology with a resulting fall in public support. At its peak in 1997, nuclear power generated 27 % of the nation’s electricity, but this has subsequently declined to about 18.5 % (in 2012) from 15 nuclear reactors, as the original fleet of power stations has been gradually retired for decommissioning and not been replaced. Based on rhetorical concerns about future energy security and pressures to reduce national emissions of carbon dioxide, the UK government announced in 2008 that it had given the go-ahead for a new generation of nuclear power stations to be constructed, with eight potential sites announced the following year, one of which was Hinkley Point.

This move proved controversial, with many NGOs, including Greenpeace, Friends of the Earth, the Campaign for Nuclear Disarmament and the World Wildlife Fund opposing the shift back to nuclear power solutions, on the basis of uncertain cost-benefit appraisal, the opacity of the planning process and environmental concerns. By marked contrast with NT2, nuclear plants like HPC do not require the resettlement of 6,500 households nor do they have the same direct negative impacts on the livelihoods of tens or hundreds of thousands of people, so the short term social and environmental impacts could be said to be more limited and manageable. However, the long term environmental and health impacts and risks posed are less favourable, due to the problems of nuclear material transport to and from site, safe disposal of radioactive waste and plant decommissioning issues passed on to future generations to resolve.

After a long period in the consultation and planning stages, a third reactor is scheduled to be built alongside two existing plants at the Somerset coastal site, namely Hinkley Point A (Magnox reactor) and B (Advanced Gas-cooled Reactor). The landscape-dominating plants occupy a low-lying, rural spot barely above sea-level next to the Bristol Channel, famed for having the second highest tidal range in the world after the Bay of Fundy, eastern Canada. This fact is material, when considering the United Kingdom’s energy futures in an era of awareness of the need to build alternative, safe and sustainable energy sources to mitigate predicted climate change. The UK government is legally committed to a gradual decarbonisation of the nation’s energy production mix up to 2050.

A view across Bridgwater Bay to the Hinkley A and B power station site. HPC will be developed alongside, at an estimated cost of £ 18 billion (David J.H. Blake)

A view across Bridgwater Bay to the Hinkley A and B power station site. HPC will be developed alongside, at an estimated cost of £ 18 billion (David J.H. Blake)

While the original A plant closed in 1999 and is being decommissioned, Hinkley B is still operating under EDF ownership and is not expected to cease operations until at least 2023. The entire site is vulnerable to future increases in sea levels, something that was not well understood when Hinkley A and B were built, but should be a high priority for HPC planners. In 1607, a major tsunami is recorded as engulfing much of this coastline and killing an estimated 2,000 people, but neither this historical event nor future predicted sea level rises of at least two metres by the end of this century and more severe weather events precipitated by climate change seems to have dampened the appetite of the proponents to push ahead with HPC, regardless of potential risks. When I visited the site in early April 2016 at high water on a spring tide, the sea was already lapping over the first line of concrete defences around the existing reactors (see picture). I can foresee extra marine erosion and flood protection measures, adding further to the costs of the project in the foreseeable future.

The coastal perimeter of the HPC site is threatened with coastal erosion, expected to worsen in future under conditions of rising sea levels, stormier weather and an underlying soft geology (David J.H. Blake)

The coastal perimeter of the HPC site is threatened with coastal erosion, expected to worsen in future under conditions of rising sea levels, stormier weather and an underlying soft geology (David J.H. Blake)

HPC was originally proposed by the government as an ideal solution to “keeping the lights on” in a climate change challenged world, able to supply 7 % of the UK’s present energy needs at a single location, through a 3,200 MW installed capacity and reliably high plant load factor[2]. The trouble is, the European Pressurized Reactor (EPR) design EDF have proposed to use is thus far unproven technology and at the four other sites where a similar nuclear reactor type is being constructed in France, Finland and China, the projects have been dogged by unforeseen technical problems leading to steep cost and time overruns.

During a spring tide in early April 2016, the sea breached the first line of sea defences near the plant. In 1607, this coastline was struck by a major tsunami that swept many miles inland and drowned thousands (David J.H. Blake)

During a spring tide in early April 2016, the sea breached the first line of sea defences near the plant. In 1607, this coastline was struck by a major tsunami that swept many miles inland and drowned thousands (David J.H. Blake)

As a political party, the incumbent Conservatives have traditionally offered strong support for nuclear power, although up until a few years ago the leadership insisted that it should not be subsidised by the taxpayer but subject to normal market forces and open competition. However, this stance shifted under the Conservative-Liberal Democrat coalition government (2010-15), when ministers decided that the UK should pursue a nuclear-fuelled future, with the provision of state subsidies to sector investors, riling both free-marketeers and renewable energy campaigners alike. This policy position remained unchanged even after the sobering wake-up call of the potential dangers surrounding nuclear power delivered by the March 2011 Fukushima disaster. Yet the British public have proven far less averse to nuclear power than the German population, perhaps partly because the former have been fed a regular line from the government that without further nuclear development the UK may be looking at future brown-outs. Such a fear-invoking narrative was recently admitted to be a myth by the government’s own Secretary of State for Energy and Climate Change, when Amber Rudd publicly stated that the nation’s lights would not go out if it was not developed, as had been claimed by her predecessors.

Such admissions are grist to the mill for the national and local civil society opposition to Hinkley, movements like Stop Hinkley which have doggedly campaigned against the project for many years, long before HPC was proposed. Although such citizen groups are ideologically opposed to nuclear power development in principle, their economic arguments against the project have been given added weight in recent years by a number of studies by financial and economic analysts, such as Liberium Capital which described the strike price as “economically insane” and “as far as we can see this makes Hinkley Point the most expensive power station in the world.”

Despite the generous government guarantees provided by a strike price (at £92.50 per MW/h) for the electricity produced of over twice the current wholesale price for electricity in the UK, the parlous state of EDF’s finances and massive debt mountain mean that HPC is a risky proposition for the utility. Its own workers’ union opposes the project and in February 2016, Thomas Piquemal, EDF’s chief financial officer resigned, warning that building HPC could ruin the company. As a result, the French government has said it plans to provide financial support to EDF, a move that will likely fall foul of EU legislation to ensure fair competition in the energy market and disallow unfair state aid to individual companies, something that the UK government is already being challenged on in the European courts by the Austrian government. With national pride and the reputation of French nuclear technology potentially at stake (EDF is also looking to invest in China and other countries), a decision from the French government on whether to bailout EDF has been delayed time and again, and a decision is not now anticipated until at least September 2016.

One remarkable point of difference between NT2 and HPC is that with the former, China was portrayed by some as a threat to EDF and Western venture capital’s regional interests, had it been allowed to gain a stake in the dam project. With the benefit of hindsight, China was poised to build dozens of other dams in Laos, with or without EDF’s involvement. But now China is actively courted as a nuclear investment partner, both for the injection of funds it can offer, but also, potentially for its technological expertise. Indeed, the China General Nuclear Power Corporation has taken a one third stake in HPC, with the deal inked just hours before the state visit of President Xi Jinping to London in October 2015. Much to the chagrin of human rights groups, the President was afforded the red carpet treatment for his visit, with PM Cameron and Chancellor Osborne hoping HPC would be the springboard for further Chinese investment in nuclear power stations in Essex and Suffolk.

With the latest twist in the Hinkley saga looking like a legal challenge will be launched against the UK and French governments, one Southwest region Green MP referred to HPC as an uneconomic “white elephant” which is being pushed regardless, because there is “now a political battle where the stakes for both the UK and France are just too high to admit failure”.

Both NT2 and NPC would qualify as prime examples of what Danish economist Bent Flyvbjerg refers to as “Machiavellian Megaprojects”, which are shown to follow a time-honoured formula:

(underestimated costs) + (overestimated revenues) + (undervalued environmental impacts) + (overvalued economic development effects) = (project approval)

As Flyvbjerg stresses in his analysis of such megaproject development by a relatively few societal elites, the monomaniacal pursuit can frequently lead to the deception of “parliaments, the public and the media about the costs and benefits of the projects”.

It seems there is more linking the development paradigm of Savannakhet and Somerset than citizens in both the U.K and Laos may fully appreciate. There is still a glimmer of hope, however, that commonsense may prevail in London and Paris, and the HPC case of folie de grandeur may be stopped in its tracks. In the case of NT2, Laos has now been locked into a project with multiple negative social and environmental consequences, many irreversible such as permanent loss of valuable terrestrial and aquatic biodiversity, that will ultimately cost its citizens and the wider Mekong basin populations dearly into the future.

[1] Interestingly, in the address given by Pierre Lellouche, Minister of State with responsibility for Foreign Trade at the Nam Theun 2 project’s inauguration ceremony on 9 December 2010, he claimed that the site was first identified back in 1927 by an engineer, presumably of the French Indochina colonial government.

[2] The plant load factor is the ratio between the actual energy generated by the plant to the maximum possible energy that can be generated with the plant working at its rated power over the duration of a year.

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“Welcome to Sayabouly – Land of Elephants & Dams”

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A propaganda poster in the center of Sayabouli township shows founding leader of the Lao People’s Revolutionary Party and former Prime Minister Kaysone Phomvihane

Sayabouly[1] province, situated in Laos’ northwest, has long been considered something of a historical and geographical anomaly. For a start, it is the only Lao province that lies entirely on the western bank of the Mekong river with only a forested mountain range separating it from Thailand, and secondly, as a once remote borderland, it has at various times been the subject of territorial disputes that occasionally have proved quite bitter.

Once part of the Lan Xang kingdom and used as a conduit for warring Siamese and Lao armies, by the late nineteenth century Sayabouly became a slice of desirable real estate for expansionist Siamese and French colonial governments, both of whom claimed dominion over its territory and rich forest resources. The Siamese were forced to cede it to France in 1904 by treaty, no doubt recognising its strategic importance for buffering the important city of Luang Prabang. During the Second World War in 1940, Thailand annexed it with the help of the Japanese army and renamed it Lan Chang, but the province returned to French control six years later with the restoration of French Indochina and Thailand was obliged to drop its claims as part of the conditions for its entry into the United Nations.

Sainyabuli_Province-Laos.svg

Location of Sayabouli province in Lao PDR. Photo: Wikipedia

Since the fall of French Indochina and its inclusion in a new Lao nation, Sayabouly has been subject to periodic Thai irredentist claims for lost lands of a greater Thai empire and saw active insurgency by Thai-funded fighters during the twenty year civil war, although it largely escaped the US aerial bombing campaign that devastated so much of the rest of the country. More recently, the southern end of Sayabouly in Botene district experienced a short border war between the Thai and Lao military from December 1987 to February 1988, supposedly over disputed logging claims and the legacy of unclear French border demarcation. This rather bloody spat reportedly led to the deaths of around a thousand soldiers (primarily on the Thai side), but was deftly hushed up by the authorities on both sides, with the Thai government blocking reporters from accessing the battlefield area. I have heard credible reports from Lao soldiers present that Thailand employed chemical weapons against the Lao

Sayabouly also offered an important sanctuary for Communist Party of Thailand (CPT) fighters during the 1970s and 80s, a leading member of which used to be a neighbour when I lived in remote Phiang District for two years in the late 1990s. I was a field-based advisor with a UNDP-funded aquaculture extension project working with the provincial livestock and fisheries department in a role that gave me a unique opportunity to travel extensively throughout the province, at a time when road communications were still problematic and slow, while telecommunications facilities did not extend much further than the provincial capital.

The kindly old Thai CPT comrade I knew had trained in China and fought in the jungles throughout Northern Thailand, eventually retreating to communist Laos following a government amnesty for CPT members being declared in 1982. After laying down his weapons, he lived out his twilight years in Muang Phiang in conditions of relative poverty living the life of a smallholder farmer, steadfastly refusing to return to his birth place in Sisaket Province, Northeast Thailand. He used to tell me about the dense forests the CPT set up small camps in to conduct raids into Thailand, which one could trek through for days without encountering a road or human habitation, living largely off hunted game and forest produce. The Lao authorities permitted a small group of Thai CPT dissidents to seek refuge in Sayabouly for years after hostilities officially ceased, including the noted writer, Assanee Polajan.

Retooling Sayabouly

Despite recent government efforts to put the province on the map through tourist promotion, attempting to take advantage of its position as both a gateway to Luang Prabang and a province with a rich potential for eco-tourism in its own right, reflected in the organisation of an annual Elephant Festival in Sayabouly provincial capital (held on 19-21 February this year), originally conceived by ElefantAsia to ensure pachyderm protection, with the elephants acting as an iconic symbol of wider Lao cultural and environmental conservation concerns.

Having evolved since its first iteration in Hongsa district in 2006, tourists nowadays would see dozens of elephants led in to the township to play football, drag demonstration logs, parade in costume, take a bath in the Nam Houng river, give rides and generally entertain locals and foreigners alike. Since its inception, the conservation message has been gradually replaced by spectacle and commercialism, with ElefantAsia nudged out of the scene by competitors with far deeper pockets and greater influence in high places, with the two most prominent names by far being “Hongsa Power Company” and “Xayaburi Power Company”. Both maintain a healthy fleet of branded four wheel drive vehicles and display prominent roadside posters around town that compete with Lao People’s Revolutionary Party (LPRP) hammer and sickle adorned banners, from which smiling demagogues beam down on passers-by above ubiquitous state propaganda messages. Ironically perhaps, given the province’s history, both of these companies are Thai-owned. Amidst this strange mix of modern corporate advertising and North Korean style political propaganda, it is unlikely a visitor would learn much about the province’s rich historical past at the Festival, much less its environmentally controversial present.

Not disconnected from the deft switch to Thai corporate sponsorship of the Elephant Festival, Sayabouly province hosts two of the largest energy production projects in Southeast Asia. These have contributed to a fundamental alteration in its ecological character in a matter of a few years, perhaps more than any other province in the Lao People’s Democratic Republic, as it is officially known. What were remarkably healthy and biodiverse forests and river systems at the turn of the millennium, have rapidly degraded to become rather lacklustre shadows of their former state, diminishing their value and utility to the majority of the scattered rural population that heavily depended upon the services they provided. Furthermore, rare and endangered wildlife species have all but disappeared, falling victim to habitat loss, hunting and a scarcely restrained trade in bush meat.

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Group of youth work as a team with nets to catch small fish in the Nam Huong river near Sayabouli township.

For many households, agriculture was a secondary occupation to the foraging and harvesting of non-timber forest products and a wide variety of aquatic organisms that formed the basis of livelihoods up to around the millennium. While this livelihood switch may be considered the inevitable cost of “development” and “progress” wherever one cares to look in the “developing” nations of the world, the social and environmental changes I found in Sayabouly during a recent visit were nevertheless rather stark and speak to wider political and structural issues emerging in this autocratic state, sandwiched between three voracious regional powers.

Harnessing Sayabouly

My first return visit to Sayabouly in over a decade began in the northern district town of Hongsa, travelling there by slow boat down the Mekong River to the minor landing at Tha Suang, an hour’s journey downstream from the popular backpacker overnight stopping off village of Pak Beng, located roughly midway between Huay Xai and Luang Prabang. Pak Beng is on the cusp of being transformed by a near-completed bridge over the Mekong that will link Thailand and China, and just above the bridge, a 912 MW hydropower dam, with the site currently being prepared by Datang, a Chinese corporation. From Tha Suang, Hongsa is reached along a narrow, twisting dirt road, which snakes up through some of the last remnants of a once immense jungle. One emerges from that forest high above Hongsa to be greeted by the sight of an immense smoking industrial complex, dominated by a massive chimney and three cooling towers. On the day of my visit the tops of the chimney and towers were lost in the cloud, giving the view something of a surreal quality, juxtaposed as it is next to paddy fields and traditional villages.

HONGSA EdMK

Hongsa lignite power station. Local air and water quality has deteriorated around the site since operations began in 2015.

Hongsa has become the site of a giant opencast lignite mine and associated thermal power station which is designed to produce when fully operational an electricity output of 1,653 MW, of which all but 100 MW will be exported to Thailand. It is described by the Lao government as a “model project” that is “truly environmentally friendly and conducive to sustainable social development”[2]. The main investors in Hongsa Power Company (HPC) are Thai companies Banpu Power and Ratchaburi Electricity Generating Holding, each of which hold a 40 % stake, while the remaining 20 % is retained by the Lao government’s Lao Holding State Enterprise (LHSE). The consortium has been granted a 25 year concession to operate the mine and power station, which employs some 700 staff, of which about 400 are Lao nationals. The concession area covers about 60 km2 and required the forced resettlement of over 2,000 people to a once-forested 1,200 hectare site located some 18 kilometres to the east of Hongsa town. Oustees are trained to adopt new and alternative livelihoods involving both agricultural and non-farm activities by staff from HPC and state officials, but inevitably within a far more challenging and biologically impoverished landscape than their more productive homelands.

The local driver who took me to Hongsa told me that since the mine and power station were built, the local river (Nam Kene) had become seriously polluted affecting the water source for several villages and killing fish all the way down to its confluence with the Mekong over 30 kilometres away. He told me, “since the power station opened last year, people in Hongsa and Muang Ngeun have been complaining about chest complaints and other health issues, brought about by the dirty air from those chimneys.” He explained that a vast area of agricultural land, mostly rice paddies, and natural forest had been confiscated over the last few years, to make way for both the mine and power station, but also the resettlement site, leading to a rapid loss of previously prolific non-timber forest products and wildlife available locally.

The same informant also told me that villagers living along the Mekong’s banks in Hongsa district were aware of and concerned about the future impacts of the Xayaburi hydropower project on their fisheries and natural resources-based livelihoods. This was the other Thai-owned mega-project looming large over the province’s future. They had already experienced a precipitous decline in fish catches in recent years, but were not sure if this was mostly related to dams upstream in China that have already greatly altered flow regime of the river, or the ongoing construction of Xayaburi dam located 90 kilometres downstream of Luang Prabang city. The Xayaburi dam project officially began construction in 2012, although site preparations had been going on for a year or two previously, creating a noted logical disconnect between Lao state-controlled media announcements and reported observations of actual on the ground activities.

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The Xayaburi dam under construction in December 2014. Photo: Courtney Weatherby

The 1,285 MW project, estimated to cost $ 3.5 billion, is owned by “Xayaburi Power Company”, which is a 50% owned subsidiary of the Thai construction corporation giant CH. Karnchang PLC, a major listed company on the Thai stock exchange. Funds to build the dam project have been loaned by a group of six Thai financial institutions, including the state-run Export-Import Bank of Thailand. Its implementation has been described as a “game changer” in terms of paving the way for future hydropower development along the lower Mekong mainstream. Indeed, since it was approved by the Lao and Thai governments, Xayaburi has sparked off a rush of new hydro development domestically in Laos, including an equally controversial project in southern Laos at Don Sahong, situated on the most important river channel for upstream fish migration, just a few kilometres from the border with Cambodia. Similar to the Hongsa project, 95% of the power produced from Xayaburi is scheduled for export to Thailand, following planned completion in 2017, underlining a wider gradual incorporation of neighbouring state’s natural resources into the Thai market. This is not to underestimate similar designs and processes underway by both China and Vietnam who are in fierce competition with Thailand for the rights and means to extract them.

Sayabouly at risk

In terms of the environmental and social impacts of the Xayaburi project, much has been written elsewhere about its destructive potential to decimate capture fisheries upstream and downstream, through blocking migration pathways and altering flow and sediment patterns across international boundaries, although the Lao government has treated its development in essence as a domestic affair, with any transboundary impacts considered minor and “incidental.” The government and developers have consistently rejected any need to accept responsibility in the event of a decline in fisheries linked to the dam, arguing that their technological mitigation methods in the form of an unproven fish lift and pass will be sufficient.

In any case, as the director-general of Laos’ Department of Energy Policy and Planning, Daovong Phonekeo maintained, following the decision to pursue construction of Don Sahong dam last year, “for the development of the Mekong River, we don’t need consensus.” Meanwhile, a challenge against the legality of Thailand’s Ministry of Energy and four other state agencies’ support for the Xayaburi dam project was brought to the Supreme Administrative Court by a coalition of villagers at risk of impact and civil society groups, but was thrown out late last year by judges on the grounds that the agencies involved had performed their legal duty correctly. An appeal against the verdict was filed by the plaintiffs on January 25 this year, but any decision will come too late to halt the dam’s completion. The often maligned and toothless Mekong River Commission has remained to all intents and purposes mute throughout this process, causing disillusioned donors to head for the door with future funding.

Although the Xayaburi dam has been roundly criticised for its destructive potential by a wide range of civil society and international state and non-state organisations and media, including repeated concerns voiced by the United States government and other Western nations, the Lao government and allied hydropower industry interests portray any opposition as being confined to a small group of foreign environmentalists that are ideologically opposed to any development activities. Thus, opposition to Xayaburi and other major Mekong dams is perceived within Laos as the preserve of a minority of Western “troublemakers” that through ignorance and arrogance, want to keep the nation perpetually poor and underdeveloped, by halting its rightful sovereign demands to fully develop its water resources for hydropower production and other purposes. Anyone who remotely sympathises in public with this unreasonable foreign position is likely to be harshly treated by the ubiquitous state machine, which falls under the direction of the Politburo of the LPRP.

As the respected historian and political observer of Laos, Martin Stuart-Fox has observed, “No criticism, or even political debate, is permitted outside the confines of the highly secretive party, which recruits its membership from the ambitious and educated. Without the support of the party, promotion in government and the bureaucracy or success in business is impossible.”[3] In short, Laos languishes near the bottom of almost any international league table of civil liberties, accountability, rule of law, and anticorruption and transparency measures, with virtually no civil society to speak of, in particular around hydraulic development issues. As a young villager watching a dam site being prepared on the Nam Kading river in central Laos once confided to me, “To speak against a dam here, is like speaking against the king over there”, pointing towards Thailand. In other words, it is just not done, if one wants to survive.

And not everyone does survive under the LPRP regime, which has ruled with an iron fist since “liberation” in 1975. Lao people who dare to speak out or protest may be incarcerated for years in grim prisons or fall victim to more brutal measures. Some have been known to simply disappear and are never heard of again, for conducting what would be considered quite innocuous activities in most other countries. Even though he was careful not to directly criticise the government’s policy on dam development and was a relatively high-profile NGO leader who had won the Magsaysay Award in 2005 and travelled extensively abroad, Sombath Somphone became a victim of suspected state enforced disappearance in December 2012. While his case has been extensively covered in the international media, and the Lao government has been criticised by Australian and European parliamentarians for not releasing more information about Somphone’s case, there has been little progress made over the last three years and the human rights situation domestically has continued to worsen, leading to a palpable sense of fear amongst ordinary citizens. According to a reliable source in Vientiane, since Somphone’s disappearance an estimated 200 Lao citizens have similarly disappeared, with a reasonable assumption that state forces are responsible.

While such figures are impossible to verify, in the absence of a free media and independent organisations to investigate such allegations, it is widely recognised by organisations such as Human Rights Watch that Laos has regressed in terms of basic freedoms over the last decade. I found Lao people I met during my visit far less likely to talk frankly about the internal situation than I ever recall was the case in the late 1990s and could only attribute this to a context of worsening state censorship of expression and draconian internal repression, even while superficially it may appear to be reaching out to processes of regionalisation and globalisation. Even foreigner friends who work in Laos were reluctant to talk about dam-related issues, perhaps frightened that their Lao visas or work permits may be cancelled by vindictive authorities. There is no contradiction in this position, nevertheless, if one appreciates how power and decision-making are centralised within the hands of a relatively small group of people at the top of a patronage-based hierarchical system.

Whither Sayabouly?

To better comprehend the political situation in Sayabouly and more broadly in Laos with regard to dam development, the visible environmental degradation and tangibly repressive atmosphere that surrounds such infrastructural development, it is helpful to recall the work of Karl Wittfogel and his “hydraulic society” hypothesis. Wittfogel, in describing the nature of state-society relations in certain ancient states in arid and semi-arid areas which exerted strong authoritarian control (often under a despotic, theocratic ruler), hypothesised that state formation and expansion was carried out to a large extent through the centralised control over water resources, in particular irrigation development and management, though included other productive and protective (i.e. flood control) functions too, as well as non-hydraulic infrastructural construction. He noted how, “the rulers of hydraulic society were great builders”, in their efforts to dominate and sustain their power base. In modern states too, one can discern how state-centric hydraulic development can permit the greater control over society, with increased bureaucratisation and centralisation of power to a small, ruling elite, paralleling the processes in ancient states, albeit within a narrower time frame nowadays due to technological advancements. Laos is becoming a classic nouveau hydraulic society as its handful of ruling families concentrate the wealth and power that results from the sole authority to dole out rights (at considerable cost, one might add) to public and private operators wishing to develop the hydraulic potential of the nation’s rivers.

This leads to some spectacularly big and bad projects being built throughout the country, exemplified by the Xayaburi hydropower project, but also a slew of smaller dam projects on tributaries, such as the one I witnessed getting under way to the east of Sayabouly town on the Nam Houng River. A contract signing and groundbreaking ceremony was held on 2 August last year attended by the recently deposed Lao foreign minister, Somsawat Lengsavad, and work is being undertaken by a Lao construction company linked to the central elite, Simouang Group and a Korean sub-contractor, Dowoo Engineering and Construction, both of which appear to have no prior experience of dam construction. Even though the electricity production capacity is relatively small at 15 MW, the project’s ecological footprint is high, that will lead to the destruction of an “ADB Sustainable Tourism Development Project” funded medicinal plant preserve and spa centre at Huay Namsai, originally aimed at boosting the province’s eco-tourism credentials, supporting ethnic minorities and boosting local livelihoods.

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Sign announcing directions to the Chinese built Nam Houng 1 hydropower plant.

When I visited in late January, the magnificent old growth forest around the centre had just been felled and the trunks were awaiting removal, while visitors to the centre were blocked from entry by dam company guards. A provincial official that had helped to establish the centre told me that he was thoroughly disillusioned, after he had learned the herbal plant centre was to be flooded by the dam and local Hmong people would lose land and livelihoods as a result. He confided that the LPRP leaders were considering changing the provincial motto from “Sayabouly, Land of the Elephants” to “Sayabouly, Battery of ASEAN”. I looked for a hint of irony in his face, but there was none.

Sayabouly province may not be territorially integrated into the borders of Greater Thailand and it is still very much a part of the PDR, but its natural resources are increasingly not being enjoyed locally by the majority of its inhabitants. Instead, they are flowing across the border to the nearest of an insatiable triumvirate of neighbours, captured by powerful foreign business interests in close collusion with the provincial and national level LPRP apparatchik. It is apparent that such processes of primitive accumulation will only grind to a halt when the store cupboard is well and truly bare, which may not be too long into the future. Tellingly, it is predicted that lignite reserves at Hongsa will be exhausted just one year after the power concession agreement expires, presumably leaving the nation with one humungous bill in clean up costs at the mega “mine-mouth power project”. Whether there will be any wild elephants left in the province’s forests by 2040, or indeed any Lao forests left intact at all, seems most unlikely under the present paradigm.

 

[1] NB: I have adopted the spelling convention most commonly used by provincial authorities, though there are several other variations commonly encountered, including that used for the eponymous hydropower dam, which I have retained when referring to the project in this article i.e. “Xayaburi”.

[2] This quote is taken from the Ministry of Energy and Mining, sponsored amongst others by Hongsa Power Company, that paints a wholly rosy picture of this and other power projects underway or already built in Laos. Available at: http://www.laoenergy.la/pageMenu.php?id_menu=47

[3] Quote taken from Stuart-Fox, M. (2008). Laos. In Sanha Kelly, Christopher Walker and Jake Dizard (Ed.), Countries at the Crossroads 2007: A Survey of Democratic Governance (pp. 369-392) Lanham, MD, United States: Rowman & Littlefield Publishers .

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